March Consumer Confidence: Happy Enough

March 28, 2007 – According to yesterday’s data release, the Conference Board’s index of U.S. consumer confidence fell by 4 index points to 107.2 in March, more than reversing February’s 1 index point increase (Chart 1).

Beyond these monthly wiggles, the broader trend in consumer confidence has been basically flat, with index levels ranging from about 100 to about 110 for most of the last 28 months. The only truly noteworthy exception was the sharp temporary dip to the mid-80 range in September and October 2005, in the aftermath of Hurricane Katrina.

Through March, consumer confidence remained well below the exceptional heights seen during the last expansion (Chart 2). Nevertheless, these are relatively strong levels by broader historical standards – and that’s relatively good news for the consumption outlook.

In particular, these data suggest that, despite all of the worrying going on at the FOMC, the average consumer has not been feeling particularly upset about the slowing to date in the housing market.